Consumer Price Index (CPI) comes in lower than anticipated. Stocks continue their run.
What Does It Mean:
Each month the Bureau of Labor Statistics produces a report measuring month over month and year over year price movement across a variety of areas within the US economy. Expectations were for a .01% monthly increase with an annualized inflation rate of 3.3%. The report came in with month over month prices flat at 0.0% while the annualized rate was 3.2%. Energy as a whole declined by 2.5% led by Gasoline, which was down 5% for the month.
Why do we care?
While not the only indicator used by the Federal Reserve to measure inflation, the CPI is the most widely known and understood inflation measurement. The better than anticipated report provided further evidence that the Fed may in fact be done hiking interest rates. Interest rates fell on the news, prompting further upside for stocks.
Investors pour trillions into Money Market funds.
What Does It Mean:
Despite the recent stock market advance, the allure of higher yields and market uncertainty has lured investors to move more money into the safety of money market accounts than any time in history as seen on the graph below.
November 17, 202
Why do we care?
I’m often asked how I can remain so bullish on stocks. Well, it’s hard for me to get my mind around the idea that the trillions of dollars seeking refuge in money market safety will in-fact be correct on their preferred investment selection. When I see such a massive movement in one direction, it is my nature to look the other way. While stocks will certainly have fits and starts along the way, the amount of money on the sidelines with the ability to move quickly back into stocks, is higher than we’ve ever seen before.
Until next time
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